Post by Intelligent PartyAnd free cash, of half the minimum wage, should be transferred to all non earning
adults.
The U.S. dollar, like almost all currencies in the world is a fiat currency.
Still, Congress keeps track of it, by taxing or selling bonds to spend money. The
Federal Reserve exercises monetary policy to buy the bonds and stimulate the
economy, or sell bonds itself to effect a contraction and act against inflation.
The Federal Reserve DOES create money out of thin air, or bonds out of thin air if
it needs to. But the point to get about fiat currency, is that spending goes to
the trade-off between interest rates and inflation, and the Federal Reserve
manages these. It COULD write off all the bonds it buys from Congress, and reduce
the so-called "National Debt."
The Macro-Economy is a trade-off between: Unemployment vs. Inflation vs. interest
rates, vs. Price to Book Values (stock market inflation).
Stimulating the economy through fiscal (Congressional) spending, or the Fed
(monetary) buying bonds, increases inflation and reduces unemployment. In the
case of monetary expansion, this is done through a lower interest rate, which may
increase stock market price-to-book values, as money seeks higher returns in
equities rather than debt. When bond prices go up, due to Fed purchases of bonds,
interest rates go down. The people who sold the bonds buy stocks and stimulate
the economy, employing more people, until the economy attains full output for the
existent capital of the moment.